Is the new Strathfield a phoenix from the ashes, or just a scorched turkey?

By Martin Vedris

SYDNEY: Somebody must know something. The Government of Ras Al Khaimah in the United Arab Emirates has bought up on Strathfield shares, as did a company in Cyprus. If the plans of Strathfield’s Vaz ‘Fix-It-Man’ Hovanessian are anything to go by, maybe buying Strathfield shares is a hot tip.

The Government of Ras Al Khaimah now owns nearly 200 million shares in Strathfield Group, or over six per cent of the voting power. Ras Al Khaimah is one of the emirates of the United Arab Emirates.

Also on the buying bandwagon, in a series of off market transfers, is Tony Hakim, who has bought nearly 400 million shares through his company Halsarn, Mick Hakim bought over 360 million shares himself, and Mark Khoury bought a similar amount. Heera Holdings in Cyprus bought up nearly 360 million shares.

Between them, on these acquisitions alone, these shareholders command 51 per cent of the voting power.

Strathfield is preparing to re-quote its shares on the Australian Securities Exchange (ASX) some time in August or September, following a period of administration, which started on 28 January 2009 and ended on 5 March.

Administration might have been the best thing for Strathfield, but maybe not so good for its suppliers. Nevertheless, the process stripped the company of external debt and the company now has its own finance division, and some new product groups to sell, as well as a plan to continue franchising the business and open 50 to 60 stores within the next few years.

Nervous investors may just want to ride the Strathfield roller coaster long enough to get their money back. However, the shares last traded at 0.6 cents before the shares were placed in trading suspension on 28 January 2009, so the shares could have some considerable upside now. Well, Strathfield Group executive chairman Vaz Hovanessian thinks so.

“I came to Strathfield on 12 December,” said Hovanessian. “I’m a corporate man who comes in and looks at companies and fixes it if I can.”

“We have now managed to remove some 40-odd million dollars worth of creditors off our books, Strathfield is much stronger, it has no external debts whatsoever, it only has internal debts to its largest shareholder … so we are a much stronger group than we were before.”

Hovanessian promises that the business is now primed for growth.

“We’re hoping to come out of this, get re-quoted on the ASX and going forward to start building up our number of stores, which we had to close in some cases where there had been negative trading histories or very large rental commitments or not just in good spots.

“We have introduced lots of new products into the mix of products we have, for example Strathfield Equipment, Strathfield Office, Strathfield Security for home and office, and soon we’ll have Strathfield Finance.”

When asked if the group was struggling to re-establish accounts with suppliers and former creditors, and paying for product on Cash on Delivery (COD) terms, Hovanessian said, “that’s absolutely nonsense”.

“We are having some serious discussions with a couple of suppliers who are pressing their retention of title agreements and the negotiations are delayed in re-establishing the accounts,” he said.

“We’ve agreed to pay anybody who wants to, COD, and of course we get our pound of flesh on that don’t you worry, we get a discount by paying COD, so it suits us.”

Hovanessian did say that some Strathfield franchisees, however, may be experiencing difficulties establishing credit with some suppliers.

“We have now gone essentially into a franchise model and a number of our franchisees are trying to establish direct credits with some of the suppliers and they may be having some difficulty, but we are there to assist them, it’s not an issue.”

Optimistic but also realistic, Hovanessian says that Strathfield can still trade on its good name, but that this will not be an overnight recovery.

“The greatest strength that Strathfield has is its name and its iconic brand, it’s been in Australia for 28 years … but going forward it has to lever off its name to try and grow again and it has loyal customers, we do have a lot of loyal customers,” he said.

“However the retail environment is tough and there are a lot of competitors as well so it will take some time before this happens.”

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